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​ The Government proposes to gradually reduce the scope of application of the income tax refund system to the amount of interest paid by an individual who is a hired employee for the servicing of a mortgage loan, according to the provinces and years.

The addenda to the RA Tax Code stipulate that after January 1, 2027, the income tax on mortgage loans will not be refunded if the property is located in Aragatsotn, Ararat, Armavir, and Kotayk provinces adjacent to the city of Yerevan, and after January 1, 2029, if the property is located in other provinces. The restrictions will not be applied to the immovable properties located or under construction in the border settlements included in the list approved by the Government.

According to the RA Deputy Minister of Finance Arman Poghosyan, the latest amendment refers to the quarterly maximum limit of refundable income tax, which is set by the current legislation in the amount of up to 1.5 million AMD. The draft envisages reducing it by defining that the total amount of income tax to be returned to the borrower and co-borrowers cannot exceed 750.000 AMD for each quarter.

According to the rapporteur, the proposed amendments will not have retroactive effect.

According to Arman Poghosyan, the purpose of the adoption of the draft is to promote urban development and economic activity in the provinces, to curb the increase in the amount of income tax returned for the servicing of mortgage loans.

The Deputy Minister answered the questions and concerns of the deputies regarding the amendments. The representative of the Government did not agree with the observation that the draft is being debated hastily: It has been under debate for more than eight months.

The Deputy Chair of the Standing Committee on Economic Affairs Babken Tunyan stated that the goal of introducing the system was not housing provision, but the development of the construction industry. According to the deputy, it not only boosted the growth of construction, gave people the opportunity to buy an apartment, but also contributed to the reduction of the shadow. “We need to understand where it is appropriate to promote housing or building construction. I think we should get the answer to the question from the policy-making body in the field of urban development,” Babken Tunyan underlined. He suggested the deputies accepting the draft in the presented version and to debate the proposals of the deputies with the concerned bodies before the second reading.

The initiative was debated in the first reading at the sitting of the Standing Committee on Economic Affairs on January 10, and was endorsed.